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Senate hearing spotlights PBM practices, with pharmacists urging closing of loopholes and insurers warning of higher costs
Summary
Senator Hammer presented SB520 to tighten pharmacy benefit manager (PBM) rules, close loopholes around generic effective rate arrangements and require reporting on rebates; pharmacists and independents urged passage to protect patient access, while AHIP warned the bill could raise costs.
The Senate Insurance & Commerce committee took up SB520, a comprehensive bill aimed at tightening oversight of pharmacy benefit managers (PBMs), increasing transparency on rebates, prohibiting certain spread-pricing practices and establishing a professional dispensing fee.
Sponsor Senator Hammer framed the bill as closing loopholes that PBMs use to circumvent Arkansas’ MAC (Maximum Allowable Cost) laws and other regulations. Ruth Boothran of the Arkansas Insurance Department summarized a recent exchange with PBMs indicating PBM arrangements using generic effective-rate (GER) contracts might not treat pharmacies as subject to MAC law; Boothran said that interpretation is inconsistent with the MAC statute and that SB520’s front section would address that loophole.
John Vincent of the Arkansas Pharmacists Association urged reforms modeled on other states and said transparency and a professional dispensing fee are needed to reflect pharmacies’ operating costs. Independent pharmacy owner Randy Casasilla described patients in underserved communities relying on local delivery services and said volatile MAC pricing and clawbacks harm pharmacies and access.
On the other side, Derek Smith representing America's Health Insurance Plans (AHIP) argued the bill would intrude on negotiated contracts, risk higher costs for consumers and weaken incentives for low-cost generic substitution. He said quarterly rebate reporting could be trade-secret sensitive and that some provisions could guarantee per-prescription profit by mandating a dispensing fee plus additional layers of reimbursement.
Department of Human Services staff warned the committee any cost increases could affect Arkansas Works’ federal budget neutrality requirement. Committee members requested time to review the amendment language and current PBM licensure regulation (effective Jan. 1) before voting; sponsor said he would return with revised engrossed language and suggested suspension of rules to expedite consideration.
